Department for Education: Capital funding for new school places - Public Accounts Committee Contents

Conclusions and recommendations

1. The Department does not know whether it
is achieving value for money with the funding it provides to deliver
new school places. The Department believes
that local authorities will be able to deliver the 256,000 places
required by September 2014 with the £5 billion of public
money it is now providing. However, it does not yet understand
how authorities are delivering these places, the costs to local
authorities, the legitimate variation of costs between authorities
or the relative value for money of authorities' different approaches.
The Department intends to collect new information from authorities
on where places are being delivered and the costs of delivery
in June 2013, but has not yet determined how this information
will be used. The Department must set out how it plans to use
its new information on school places to ensure that capital funding
is given to those local authorities that have the greatest need
for extra school places. The department must also clarify how
it will support and challenge local authorities and show that
value for money is being achieved.

2. The Department was slow to respond to the
rising demand for school places. The Department
relied on national demographic statistics and local authorities'
projections of need. We accept that forecasting involves inherent
uncertainties, but both national and local projections were slow
to identify the trend of rising demand. Despite the birth rate
beginning to increase in 2001, it was not until 2008 that the
ONS reflected the rising birth rate in its population projections.[2]
In addition, the Department has taken too long to develop its
funding approach to better target available funding to the areas
that need it most. Delays in recognising and then responding to
the scale of the challenge have limited the Department's and authorities'
ability to effectively prepare for future levels of demand when
making decisions about the size and shape of the school estate.
To avoid being caught out in future, the Department should, working
with the Office for National Statistics (ONS), the Department
of Health and local authorities, model different scenarios in
order to manage emerging demand better in both primary and secondary
schools.

3. The Department has improved the way it
targets money to areas of need but there are still gaps in its
understanding of the full costs of delivering new places. The
Department's latest funding allocations (announced in March 2013)
have given relatively more funding to areas projecting the greatest
pressure on places. However, its funding mechanism does not sufficiently
take into account the availability and cost of suitable sites
in different areas. In addition, the Department has not yet factored
in the expected reduction in costs from the more modern designs
developed as part of the Priority Schools Building Programme.
In ensuring that its funding allocations are as sensitive to need
as possible, the Department must understand and reflect all appropriate
costs incurred by local authorities in providing new school places.

4. The Department's assumption about local
authorities' contribution to the cost of delivering school places
was made without robust evidence and without proper regard being
given to the reduction in local authority spending.
Local authorities have been using funding from other programmes
to meet demand for school places, despite the Department's view
that its funding is now sufficient to cover the costs of delivery.
The Department's assumed contribution was a broad, national estimate
and did not take account of local factors that might lead to individual
authorities contributing more or less than the national estimate.
In 2012-13, 64% of authorities were drawing on maintenance funding
to pay for extra school places, storing up unknown maintenance
costs for the future. In addition, the Department has not considered
wider pressures on local authorities resulting from reduced budgets
in its assumptions. The Department should develop more realistic
assumptions about the level of financial contribution authorities
can be expected to make to delivering school places, which take
account of the wider financial challenges authorities face.

5. In order to fulfil their statutory obligations
and in the new context where local authorities do not control
Academies and Free Schools, local authorities need to have mature
discussions with all parties, including these schools.
Local authorities can direct maintained schools to expand or close,
depending on fluctuations in demand, but do not have this power
over academies or free schools. Local authorities cannot create
new schools that are not academies or free schools although authorities
may encourage bids for creating free schools in their areas. We
asked the Department how it would resolve matters if, for example,
it would be better for an academy or free school to expand or
to close in accordance with changing demand in an area, but the
particular school(s) did not wish to do so. The Department told
us that such situations are best settled by sensible discussions
between professionals in the area concerned, and assured us that
matters had been resolved in this way in all cases so far. We
hope that discussions at local level always prove successful;
however, we would like to receive greater reassurance about the
actions it will take in order to help resolve matters to achieve
the best value for money solutions in the event that local discussions
break down.

6. There is little oversight of the impact
decisions about how to provide new places may have on pupils'
learning. In the rush to deliver sufficient
places, authorities may have to make decisions that affect the
quality of education on offer. For example, in areas where there
is pressure on school places and a shortage of suitable land,
authorities may have to convert communal spaces and specialist
areas (such as libraries or music rooms) into classrooms. Some
authorities may have no choice but to expand poorly performing
schools, if places are required in that area. In its response
to us, the Department should set out how it intends to monitor
the impact that current pressures to increase the number of school
places are having on educational opportunities, quality and standards.